Thursday, 17 February 2011

Investors warn about financial crisis in China

Warnings about a looming financial crisis in China are becoming louder day by day. According to a new Bloomberg poll almost half of the international investors interviewed expect an end to the current Chinese growth miracle quite soon. Another 40% believe that the crisis will hit China after 2016:

GLOBAL investors are bracing for the end of China's relentless economic growth, with 45 per cent saying they expect a financial crisis there within five years.An additional 40 per cent anticipate a crisis after 2016, according to a quarterly poll of 1000 Bloomberg customers who are investors, traders or analysts. Only 7 per cent are confident China will escape turmoil indefinitely.''There is no doubt that China is in the midst of a speculative credit-driven bubble that cannot be sustained,'' said Stanislav Panis, a currency strategist at TRIM Broker in Bratislava, Slovakia, and a participant in the Bloomberg Global Poll, which was conducted last week. Mr Panis likened the expected fallout to the aftermath of the US subprime mortgage meltdown.---Any Chinese financial emergency would reverberate around the world. The total value of the country's exports and imports last year was $US3 trillion, with about 13 per cent of that trade between China and the US. As of November, China also held $US896 billion in US Treasury notes.
--Fifty-three per cent of poll respondents said they believed China was a bubble, while 42 per cent disagreed. China's neighbours were the most concerned: 60 per cent of Asia-based respondents identified a bubble in the world's second-largest economy.